If there is one thing every parent wants, it’s knowing that when the time comes for your child to fly the coop, you did everything you could to prepare them for successful adulthood. As parents, we spend the first decade or so of our children’s lives teaching them the basics of self-care. We teach them about good hygiene, stranger danger, and manners. When they become teenagers, we teach them about safe driving and how to say no to peer pressure and help them try to figure out what they want to be when they grow up. Yet, we often overlook a fundamental step. While many of us teach our kids the basics of money, we sometimes fall short in teaching them strategies to manage and save it. Teaching your kids how to develop good money-saving habits now is an investment in their future we just can not afford to neglect. Here are 4 tips on how you can help set them up for success.
Start Young
We all know kids are motivated by money. Even toddlers understand that work has value if you reinforce it with a reward. It doesn’t have to be much, a couple of quarters, a few dollars here and there. Little kids are highly motivated by rewards so why not get the ball rolling early? And what kid does not think it’s fun plinking change into a piggy bank only to repeatedly dump it out and ask you to count it with them? The bonus benefit here is that they will also learn important lifelong math skills in the process. That’s a win in any parent’s book!
Don’t Buy Them Everything
Part of understanding the value of money is learning how to save it. As parents, it is in our nature to want our kids to have everything but if we give it all to them, they might grow up expecting handouts and no parent wants that. So, instead of just buying your 5-year-old that hot wheel car next time you go to the store, teach them the value of money by paying them for helping out around the house so they can pay that dollar on their own. Or when your 10-year-old wants the newest Nerf gun or video game, if you are already giving them an allowance for chores, make them contribute to the purchase. Doing so will set them up for the teen years when it seems everything they want is outrageously pricey. AirPods or cars, anyone?
Help Them Budget
Speaking of cars, before you know it your son or daughter will be old enough to drive. While most kids do not start off with a new set of wheels, eventually you will both want them to purchase their own vehicle. Teach them how to save along the way. Explore the pros and cons of buying used vs. new. Help them search for safe vehicles. Teach them about maintenance and other expenses that come with car ownership, like insurance. To start, you will probably add your child to your own policy as a driver, but eventually, they will have their own policy and they should know how to search for the best rates. Guiding them in their first large purchase will set the stage for responsible spending habits in the future.
Take It Further
Too often, kids leave the nest with minimal understanding of just how expensive it is to be an adult. Why stop at purchasing a car? Invite your kids to look at your own budget. Teach them about financing a house. Perhaps more importantly, teach them about smart borrowing. Teach them everything about credit cards to loans to planning for college. If college is on their radar, be diligent in teaching them about student loans. It is no secret that the student debt crisis is growing and if you guide your child in researching student loan options early, you might just save them a headache or two down the road. Studies show that having that debt looming over you can take a toll on every aspect of one’s life if not approached smartly. Teaching your kids about smart financing now is critical to their future success.
When it comes to preparing your kids for the future, there is no financial topic that is off-limits. Take the time to teach them smart money management skills from the start. It’s their best shot at being successful in the future.